Cleaning up old A/R from prior "accountant"

Glad to see you here, @batvalil.

I'm here to help walk you through clearing out your customer's old balance in the system. Let's get started!

To start with, let's create a general journal entry to write off your accounts receivables. Here's how:

1. Create the appropriate journal entry.
   1. Go to the Company menu.
   2. Choose Make General Journal Entries.
   3. In the Make General Journal Entries window, change the date and fill in the entry number if necessary.
      1. Go to the Account field.
      2. Select Accounts Receivable.
      3. Enter the amount under Debit column.
      4. Choose a Customer Name from the drop down list.
      5. In the next line, select the offset account.
      6. Type in the amount under Credit column.
2. Apply the General Journal Entry to the Existing Credit.
   1. Click the Customers.
   2. Choose Receive Payments.
   3. Enter the name of the customer in Received From field.
   4. Select the invoice and choose Discounts & Credits.
   5. Under Credits tab, select the available credit.
   6. Click Done.
   7. Select Save & Close.

That should do it!

If you need further help with the steps above, I'd recommend contacting our Customer Care Team. A specialist will be able to access your account in a secured environment and further assist you via remote access session.

Here's how to contact us:

1. Visit: https://help.quickbooks.intuit.com/en_US/contact.
2. Choose your QuickBooks Product.
3. Select your QuickBooks Version.
4. On the Contact Us page, click a topic.
5. Click on the Get Phone Number button to see the support number.

Feel free to drop a comment below if you have other questions about writing off your customer's balance. I'm always here to lend a hand.

You don't create More JE.

@IamjuViel

Please Learn from the input here. JE should be Avoided for anything where Names are involved.

@batvalil

They are not used for AR, AP, you cannot list Items, they are not going to show as sales or allow for sales taxes, not for QB payroll. Worse, you just bypassed Cash vs Accrual Basis reporting. Your income tax reporting in those prior years might be horribly wrong. Let's review.

"I have close to $100k in credit balances."

This is where Cash vs Accrual is the issue; Negative AR does not show as Income for the financial reporting, and if some of that is Sales tax liability, that isn't getting any details about the funds from a corresponding Invoice details, at all.

"In looking at what the prior "accountant" did I can determine the following -  A journal would be booked (instead of creating an invoice) debiting A/R and crediting the income account.  The customer name was noted in the memo line."

QB requires a Name in the Customer Field, if they posted to "AR"; otherwise, you would use your own Generic Other Current Asset.

"When the payment was received a customer account was created  and the check was received against the customer account; however, there were no invoices to post these checks against because the invoice was created with a journal entry."

You would be able to Apply them to each other if there was a Name in the Income JE for the AR line. If there is not a name, they didn't use "real AR" and that means, you can create an Other Charge Type item linked to that Other Current Asset account and put that on an Invoice for the customer now, dated historically for that JE. Apply the Available Credit to the Payment. Now you are Clearing that Other Current Asset Balance and applying the Negative AR from the checks.

I am trying to unravel what the old accountant did.  The A/R balance per the GL is correct only the AR aging is not.  There appears to be a great deal of journal entries booked over a two year period (2003-2005) to adjust A/R to the accurate balance.  I need to adjust the customer detail / A/R aging only.  It appears all the payments were received against customer accounts but an invoice was never created.  They recorded the sales with a journal entry.

"The A/R balance per the GL is correct only the AR aging is not."

JE don't Age. They don't have Terms or Due dates. They just sit there. If they are Applied, they don't show as Open. If they are not Applied, they show as Open. That is All they can do for you.

"There appears to be a great deal of journal entries booked over a two year period (2003-2005) to adjust A/R to the accurate balance."

It's always the Wrong Tool for this.

"I need to adjust the customer detail / A/R aging only.  It appears all the payments were received against customer accounts but an invoice was never created."

Yes, I covered everything I would do if this file was in front of me.

"They recorded the sales with a journal entry."

That isn't Sales. That is a Manual Entry as income.

Here's the First Thing: don't make More JE. Don't make it Worse.

Here's the Next Thing: You cannot adjust AR without using a name, even if that is a generic name.

Here's the Next Thing: You cannot apply anything against anything if the Names Don't match. A JE for a generic customer cannot be applied to a Sale for a Real Customer, if that is AR; or vice versa.

Here's the Final Thing: You would be able to Apply them to each other if there was a Name in the Income JE for the AR line. If there is not a name, they didn't use "real AR" and that means, you can create an Other Charge Type item linked to that Other Current Asset account and put that on an Invoice for the customer now, dated historically for that JE. Apply the Available Credit to the Payment. Now you are Clearing that Other Current Asset Balance and applying the Negative AR from the checks. I gave this info, based on what you told us.

I tried this method.  It did not work.  I deleted the journal entry and now I cannot delete the payment information.  Why does Quickbooks make up that A/R account?  I do not like a piece of software making automatic decisions for me.

I recognize you're dealing with a challenging situation, @jmkatis. I want to assure you that I acknowledge the difficulties you're facing, and I'm here to support you through it all.

To assist you effectively, may I know what steps you follow in this thread? Can you provide more information about the payment information you deleted? Also, what do you mean about the account receivable account is this the default one or the new one? Sharing additional details will help me address your concerns accurately and provide a tailored solution.

Please don't hesitate to provide more information below to help me gain a better understanding of the problem. I'll keep a close eye on your response, @jmkatis.

I have a client who connected a 3rd party app/program to QuickBooks desktop.
That app is for tracking customers and income.
The journal entries that the app was set up to send to QuickBooks desktop are as follows:
(1)  Accounts Receivable $XX debit
                                   Income $XX credit
(2)  Cash/Undeposited Funds, etc. $XX debit
                                        Accounts Receivable $XX credit
These entries have been sent to QuickBooks daily for years.
PROBLEM: the credits to Accounts Receivable have never been applied to the debits.
So the Open Invoices report has hundreds and hundreds of journal entries listed (that basically net out to zero).
How can we get them applied without clicking on every single individual payment and applying it LINE BY LINE in the Customer/Receive Payments screen?

To follow up on this post:  I called Intuit and they are totally hung up on this being about the 3rd Party app.

This is a new client and I have fixed how the 3rd Party app sends over the income and payment entries.

The 3rd party app is totally irrelevant at this point.  A human being could have posted these journal entries.

The POINT is:  how do we clean up hundreds and hundreds of journal entries hitting A/R over several years WITHOUT having to click on each and every single entry in the "Customer Payment" screen?

HOW the journal entries arrived in QB does not matter.  Forget that I ever mentioned a 3rd Party app.

All that matters is that it will take WAY TOO MUCH TIME to click on every single entry to get this fixed.

I was also given the following link by Intuit customer service on the phone:  https://quickbooks.intuit.com/learn-support/en-us/help-article/journal-entries/create-journal-entry-...

This link suggests options for Add, Edit, Reverse, or Delete the entries.  The journal entries are correct as far as the income that has been recognized and the various payments that have been received over the years.  Therefore the JE's cannot be added, edited, reversed, or deleted.

They just need to be APPLIED.  And APPLIED in bulk, not one-by-one.

I appreciate your efforts in reaching us here in the Community and to the Intuit live support team, NumbersNC. The best option to make is to manually received the payment of each transaction to appear on the debit side of Accounts Receivable. I'll outline the steps below.

The option to batch apply payments that appeared only on the credit side of your Accounts Receivable is currently unavailable in QuickBooks Desktop that's why you need to do it manually.

Here's how:

1. Go to the Customers menu, then choose Receive payment.
2. Select the customer's name in the Received from dropdown.
3. Enter the Amount and also the necessary details that need to be filled out.
4. Click Save and Close. By default, it's only deposited in the Undeposited funds.

In QuickBooks Desktop (QBDT), batch or bulk-applying payments aren't currently available due to the need for precise accounting. This could prevents mistakes in the books and makes sure every transaction is tracked properly. It helps keep detailed and accurate financial records, which is essential for managing money well.

You can refer to this article to manually receive the payments of each transaction: Receive payments in QBDT.

After you have received each payment, you can now make a bank deposit in QuickBooks Desktop.

We need to manually apply payments to ensure accuracy in your accounts even it could take much time and effort to finish. If you need further assistance, feel free to reach out anytime.

@NumbersNC 

"The 3rd party app is totally irrelevant at this point"

Well, not totally.  It depends on what customer name the app used for these journal entries (JEs).  What customer name is listed under the NAME column on the JEs?  JEs need to have a name assigned to any entry that hits A/R.  Is it the same name on the payment (A/R credit) as the sale (A/R debit)?  If so, go to Customers > Receive Payments.  Choose that customer name and you will be able to apply the credits to all of the invoices in one fell swoop.  If it's not the same customer name on the journal entries, then you will need to clear them one at a time, going customer-by-customer.  

@Rainflurry 

The app used the same Name for both the debits and the credits to Accounts Receivable for all transactions.  The journal entries net to zero (under that customer's name in the Open Invoices report).

The very first thing we did was go to Customers/Receive Payments and select that name.  However, there are hundreds and hundreds of lines.  We have only been able to do the cleanup line-by-line.  We have not been able to apply the credits in one fell swoop. 

If you test it out by making the journal entries that the app made (earlier post) - and make a bunch of them - I think you will find you have to select each line, apply a credit, then select the next line, apply a credit, etc.

I could do it if they were in Enterprise or if I still had my Accountant's copy of Premier because with that I would have Accounting Tools/Fix Unapplied Customer Payments and Credits.  That works in bulk, or in one fell swoop, as you say.  They are in Pro (NOT an Accountant's version) so they don't have "Fix Unapplied Customer Payments and Credits."  I can't restore their data to Enterprise to do it.

And by the way, Intuit's customer support (both on the phone and above) did not know about Accounting Tools/Fix Unapplied Customer Payments and Credits - the One Fell Swoop solution.

@NumbersNC 

"If you test it out by making the journal entries that the app made (earlier post) - and make a bunch of them - I think you will find you have to select each line, apply a credit, then select the next line, apply a credit, etc."

You don't need to apply the credits line by line.  Check all the invoices (A/R debits) first, then click 'Discounts and Credits' or 'Apply Credits' once, and then check all the credits.  OK, so maybe not one fell swoop, but this shouldn't take long even with hundreds of transactions.

@NumbersNC 

My apologies.  You're correct that you need to go line by line to apply the credits when you have equal A/R debit and credit entries. 

However, a workaround is to receive payment on all of the invoices at one time and deposit them into a bank Clearing Account (set one up if you don't have one).  That clears all of the invoices (A/R debits) and leaves the credits open.  Then, create a journal entry that debits A/R and credits the Clearing Account for the total amount in the Clearing Account.  That will give you one large invoice (A/R debit) to use to clear all of the A/R credits without having to go line by line.  The bank Clearing Account should be $0 after clearing the credits. 

If you're not aware, you can use the space bar to check an invoice/credit and the down arrow to go to the next line.  I find that quicker than having to click on each invoice/credit line with the mouse but to each their own.